Running head: STARBUCKS-CASE ANALYSIS 1

Case Analysis of StarBucks

Pavith Vanturu

Royal Roads University

Author Note

This assignment was prepared for Managing Change in Global context, MGMT-

582,taught by Professor Sandy walker and was submitted on Nov 17th 2019.
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Introduction

This Case analysis is about Starbucks, a Seattle based coffee chain which was recently

accused of racial discrimination where two of its African American customers were accused of

trespassing in one of their Philadelphia Store. After the video of the incident was released,

Starbucks met with protests, and CEO Kevin Johnson issued a public apology to the

victims(https://www.theguardian.com/us-news/2018/apr/16/arrest-of-two-black-men-at-

starbucks-for-trespassing-sparks-protests) . The company then decided to shut 8000 stores for an

hour and train its 1,75,000 about racial

sensitivity.( https://www.forbes.com/sites/shephyken/2018/06/01/starbucks-closes-8000-stores-

for-racial-bias-training-is-it-enough/#758187592831)

This paper is emphasis the organizational structure of Starbucks based on classical theory,

Human relations theory, contingency theory, Cultural excellence theory with use of

Organizational Learning to address the situation moving forward.

Structure of starbucks- Classical and Human relation theory aspect

The organizational structure of Starbucks can be seen as based on classical theory where

the top management plans and takes decisions for the organization (Burnes, 2017, p.40). It is

evident from Washingtons post article where it was found that “The company leaves the safety

customer service protocol decisions to the store managers” (Siegel & Horton, 2018, para.29). It

can be said from this that Employees of Starbucks had targets to fulfill and were trained to

achieve goals beneficial to the organization .(Burnes , 2017, p.49).It can also be a reason for the

employees behavior where they were just following orders and didn’t take humane approach

towards their African American customers .

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Here we can also see the Human relations theory in play as the Manager had the

discretion to let anyone use the washroom but decided not to do so which is evident that

Manager has negative assumption of the two customers and wanted to control the situation and

dominate it, which shows McGregor’s theory X.

Use Contingency Theory and Cultural Excellence to describe and analyze the strategy used

to address the situation on May 29, 2018.

On, May 29th ,2018 Starbucks closed 8000 stores and trained 175,000 for anti-bias

training and Starbucks updated its policies and introduced “Ask your customers” policy where

baristas are taught to greet customers respectfully and act responsibly. (Stewart, 2018, para. 7)

According to contingency theory Starbucks decision reflects Burnes and Stalkers

transformation from mechanistic to organic structure. (Burnes, 2017, p.p 96-97) . Here

Thompson’s Reciprocal Interdependence is evident as all employees from the top management to

the baristas came together for direct conversation and training. (Burnes, 2017, p.p 122-123)

The Cultural excellence theory can be seen in the Chunking strategy of Peters and

Waterman adopted by Starbucks where the first step after the controversial arrest of the

customers was to introduce bias training and future group conferences( Gurchiek, 2018,

para.3)Starbucks initiative showed the company’s commitment to its values over revenue , as it

lost revenue of 8000 stores in one day when they shut shop to carry on this training, which

emphasis on P&W theory that employees are human with emotions and with treated accordingly

with care and respect give productive results( Burnes, 2017, pp. 122-123).
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What might have led to the ejection of the police officers from the store on July 4,

2019.

On July 4th, 2019 Police officers in Tempe Arizona were asked to leave the premises or

move out of sight of a customer where they were making a customer feel

unsafe .( https://www.npr.org/2019/07/07/739308468/starbucks-apologizes-to-police-officers-

who-were-asked-to-leave-an-arizona-store ) The employee used the optimistic approach by

understanding the customers need for safety. Here McGregor’s Theory Y can be seen and some

of the pros of McGregor’s Theory of Y here are:

(1) Concerned about customers welfare- A positive and dedicated approach

can be seen from the employees towards their work

(2) Flexibility in decision making with little supervision- Officers were

informed about the customers concerns by the employee

(3) Excellent customer service by the employee as employees handled the

customer grievance directly.

Now talking about the cons I would say that Maslow’s Hierarchy of needs theory

addresses the issue well as the incident talks about the need of safety of the

customer .Maslow’s theory has a major drawback as people needs differ from person to

person and no one is in the same level of need, and everyone needs cannot be fulfilled at

the same time(Burnes, 2017, pp .84-85). The officers esteem needs had to be overlooked

for the customers need of safety when they were asked to leave the store. (Aponte, 2018,

para 1-3)
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Fig. 1 Maslow’s Hierarchy of needs

Organizational Learning to Move Forward

Starbucks two discrimination cases with a year was a proof that it needed to revamp its

policies and head towards organizational learning. “Coffee With a Cop” was started after this

where it was seen as campaign to bring Hawthorne community closer over a cup of coffee

where community members and the police department got together to talk and bridge mental

barriers and to learn about each other and build safe space for everyone.(Coffee With a Cop,

2018). According to Burnes (2017) an organization to undergo Organizational Learning must

find a way to create an environment where human talent is developed at all levels. An

organization makes changes strategy and structure quickly when its values are aligned with their

environment and for a wholesome organizational learning package, organizations should

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improve continuously with future in mind where change is a part of the organization (pp. 137,

170).

According to Pontefract (2018) for any change to come about, Starbucks needs a long-

term strategy as employees need to be trained in formal and informal setting and one day training

is not enough for this purpose. The observation done by Pontefract can be interlinked with the

main aspects of Organizational Learning where it says that the daily collective learning in an

organization helps in alleviating internal and external changes (Burnes, 2017, p. 172). Here,

Preferred actions can be carried out in form of simulations in every level of the organization for

inculcating racial sesntivity, with managers remining staff everyday about racial sensitivity and

work place ettiquettes for which they can use visual aids like posters in every store which will be

helpful in remining that staff that treating customers well is the key component of Starbucks and

after work and home , the third where they are always welcome is Starbucks.. (Pontefract, 2018).

Conclusion

The structure of Starbucks followed a top-down approach of the classical theory but

allowed store managers to make decisions, which led to the incident on 12th April. The strategy

adopted by the company was constructive as it followed ‘chunking methodology’ and

encouraged open and direct conversations. The employee showed a positive approach to resolve

the situation on 4th July, 2019, but it led to the ejection of the police officers. However,

organizational learning hold the key for Starbucks to a successful future.

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References
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Footnotes
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